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A faster fall in imports and high yields could continue to support the peso’s advance after 1.4% gain against the US dollar in the month. Economists at ANZ Bank forecast USD/PHP at 49.80 by the end of 2020.

Key quotes

“Persistently weak crude prices and subdued domestic demand have notably improved the trade deficit in recent months. Import weakness is expected to continue, given that the recovery in domestic demand is sluggish. The tremendous increase in global liquidity is also expected to support the peso.”  

“Despite an adverse growth outlook, the PCOMP index has recouped half of the loss it suffered at the start of the pandemic, while Philippine yields remain high despite the recent BSP rate cut.”

“We believe that the PHP’s advance will be largely unaffected by the adverse growth outlook for the economy. In fact, we see scope for a further fall in USD/PHP, which we expect to reach 49.80 by year-end.”